Hang Seng Index creator, Stanley Kwan, dies at 86
Stanley Kwan, the banker whose 1969 creation, the Hang Seng Index, became a widely used gauge for the Hong Kong Stock Exchange, has died. He was 86.
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Bloomberg in Washington
07 January 2012
Stanley Kwan, the banker whose 1969 creation, the Hang Seng Index, became a widely used gauge for the Hong Kong Stock Exchange, has died. He was 86.
Kwan died on December 31 of heart failure at Scarborough Grace Hospital in Toronto, the Toronto Star reported.
The Hang Seng Index was “the ultimate capitalist measure of Hong Kong”, Robert Nield, president of the Royal Asiatic Society’s Hong Kong branch, wrote in a foreword to Kwan’s 2008 book The Dragon and the Crown: Hong Kong Memoirs.
As a banker at Hang Seng Bank from 1962, Kwan saw his creation mirroring the growth pains of Hong Kong, with the index crashing during the 1974 world oil crisis and the 1983 impasse in the handover talks between China and Britain, but also benefiting from the opening up of the mainland. Its 48 members now include Industrial & Commercial Bank of China, the world’s largest lender by market value, and PetroChina, Asia’s biggest company by market value.
As Kwan relates it in his book, the bank’s chairman, Ho Sin Hang, and general manager, Q.W.Lee, decided late in 1969 “that they needed a measure of the performance of the stock market for their own as well as their customers’ reference”. Kwan said Ho spoke of creating the “Dow Jones Industrial Average of Hong Kong”.
According to the draft notes for a speech Kwan gave in 2009, the Hong Kong economy had hit “rock bottom” after riots related to the Cultural Revolution swept the city in 1967. He said some at Hang Seng Bank questioned the planned index as it was “only a small Chinese bank.”
Kwan said he led a group in consulting government and university statisticians and economists.
For the index’s “base day” - the period of trading that other days would be compared with - the group settled on July 31, 1964. They chose the initial 33 companies that would be the index’s constituent stocks It debuted on November 24, 1969.
“In the end, the system worked well,” Kwan wrote. “By the time I retired in 1984, the number of companies listed on the Hong Kong Stock Exchange had increased to over 250, but the number of constituent stocks remained 33, and these companies still accounted for about 75 percent of total market value.”
Kwan, who retired to Canada, said in a December 2010 interview that his role in history earned him no lasting fame. “If I walked into the Hang Seng Bank head office today, no one would know me,” he said.
“The index he created has stood the test of time,” said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities in Hong Kong.